Create a free account to continue

WTO Tells China To Change Auto Tax Policy

WTO panel ruled Beijing improperly taxes imported auto parts at the same rate as finished autos; China refused to comment on the decision.

BEIJING (AP) — China refused Thursday to say how it will respond to a defeat in a World Trade Organization dispute over auto parts but expressed respect for the WTO process.
''China respects the procedure to solve the dispute, but we will not comment on the issue until it is solved,'' said Foreign Ministry spokesman Liu Jianchao at a regular news briefing. He said he was speaking on behalf of China's Ministry of Commerce, the department that normally handles such disputes.
Liu did not answer a reporter's question about whether Beijing will appeal.
A WTO panel ruled Wednesday that Beijing improperly taxes imported auto parts at the same rate as finished autos. The United States, the European Union and Canada said that deters automakers from making cars in China using imported parts. They said it is costing jobs abroad.
The panel called on Beijing to bring its regulations into line with WTO obligations.
It was China's first WTO defeat. The decision is officially only an ''interim ruling,'' with a final decision to be released later this year, but no panel has ever changed its findings between an interim and final decision.
China says the tariffs are meant to stop automakers from importing cars in sections and then assembling them. But the U.S. and the EU say China promised not to treat parts as whole cars when it joined the global free-trade body in 2001.
Critics of Beijing's trade record say such obstacles have helped to swell its swollen trade surplus.
The U.S. deficit with China for 2007 is expected to exceed a record US$250 billion (euro172 billion). The EU trade gap with China swelled by 25 percent in the first 10 months of 2007 to euro132.2 billion (US$195.5 billion).
Washington has brought WTO cases accusing China of violating its trade pledges by failing to stop widespread product piracy and over restrictions on the sale of books, CDs and DVDs.
China is the world's second-largest vehicle market after the United States. Sales rose 22 percent last year to 8.8 million units, according to the government-sanctioned China Association of Automobile Manufacturers.
The United States exported auto parts worth US$840 million to China in the first nine months of 2007, up 38 percent from the same period a year earlier, according to the U.S. Commerce Department.
European carmakers have about 25 percent of the car production market in China. Figures provided in 2006 put its auto parts exports to China at about euro3 billion (US$4 billion) annually.
More in Supply Chain